Pirated versions of Microsoft's next generation computer operating system are on sale in Malaysia, more than a year before the official release date.

The software, codenamed Longhorn, is on sale in Johor Baru, a city in southern Malaysian, costing less than $2.

The episode is an embarrassment to Microsoft whose products are favourites with pirates.

The new program, which is due to supersede Windows XP, is not expected to be officially released until 2005.

Early version

Microsoft's unveiling of its next operating system is expected to be its largest software launch of the decade.

Longhorn makes big changes to Windows by altering its filing system, improving security and graphics and make the software less prone to crashes.

A Microsoft spokesman told the BBC it believed pirates obtained one of 8,000 trial copies of Longhorn handed out to programmers at the Professional Developers Conference held in Los Angeles in October.

The software is still in an early stage of development known as pre-alpha.

The company says it would be extremely risky to load the still unstable operating system onto a home computer.

Pirated music and software is popular in Malaysia

The popularity of Microsoft's products makes it a tempting target for pirates.

Every version of its operating system, its games and office programs appear in pirated form before, or soon after, the official launch.

In 2001 pirate copied of Windows XP were on sale in China before the official version was launched. They cost 30 yuan (£2.45) compared to 1,498 yuan (£123) for the official version.

Microsoft has tried to combat piracy using activition codes but pirates and criminal hackers have found ways round such security measures.

Bill Gates has been bothered by piracy since the earliest days of Microsoft.

In 1976 Mr Gates wrote a letter to the pioneering Homebrew Computer Club, where many Silicon Valley legends met for the first time, decrying the pirating of a paper tape version of Basic he and Paul Allen had written.

In the open letter to the club Mr Gates said piracy prevented good software being written.

He wrote: "As the majority of hobbyists must be aware, most of you steal your software".

Software sale

Malaysia is a major centre for intellectual property piracy and the government has been under pressure from Washington to do more to combat the problem.

Malaysian pirates are among the world's most audacious. Major Hollywood movies can regularly be found on sale here in disc form long before their international premieres.

In May, the Malaysian authorities shut down scores of shops selling pirated films. However those selling illegal copies of computer software seemed to escape more lightly.

The country's domestic trade ministry subsequently announced it was considering bringing down the price of legitimate software by imposing price controls - a move the industry said would lead to major players like Microsoft withdrawing from Malaysia entirely.

Ironically, Malaysia has been feted by the Business Software Alliance, a global anti-piracy body, for reducing piracy rates from 82% in 1982 to 68% in 2002.